NJ Real Estate Developer, Attorney Admit Multimillion-dollar Mortgage Fraud Scheme
A New Jersey real estate developer and an attorney each have admitted to conspiring to orchestrate a mortgage fraud scheme that led to over $3.5 million in losses.
- 63-year-old Victor Santos (a.k.a. Vitor Santos) of Watchung and 69-year-old Fausto Simoes of Millington each pleaded guilty to count one of an indictment charging them with conspiracy to commit bank fraud.
- The guilty pleas were submitted before U.S. District Judge Michael A. Shipp in Trenton federal court this past Wednesday.
Federal authorities say,
From September 2007 through November 2008, Santos, a real estate developer, and Simoes, an attorney, conspired with each other and others to fraudulently obtain mortgage loans with a total value of more than $4 million. Santos orchestrated the scheme to recruit fake, or “straw” buyers to purchase 12 properties in Newark. Using the identity and credit of these straw buyers allowed Santos, Simoes, and their conspirators to conceal their identities from the lender as the actual purchasers of the properties. Santos and others induced people to be straw buyers by agreeing to pay each straw buyer at least $5,000, secure tenants to lease the purchased properties, and cover costs associated with the property, including fees associated with the real estate purchases and the mortgage payments on each of the fraudulently obtained mortgages.
U.S. Attorney Philip Sellinger says Simoes conducted the closings of 10 of the fraudulent transactions and helped perpetuate the fraud by falsely reporting that the straw buyers were providing the cash required at closing when Simoes received those funds from a shell company controlled by Santos and another conspirator.
For several transactions, Simoes also failed to disclose to the lender that the shell company controlled by Santos and another conspirator would receive a substantial payout from the loan proceeds.
Shortly after the properties were acquired, Santos and his conspirators broke their promises to pay the mortgages. The straw buyers, in whose names the mortgages were obtained and thus were responsible for the payments, did not have enough money to pay the fraudulently obtained mortgages and defaulted, which caused the lender, Fannie Mae, and insurers to lose more than $3.5 million.
Big prison time possible
Conspiracy to commit bank fraud carries up to 30 years in prison and a fine of up tp $1 million.
Santos is scheduled for April 12th and for Simoes the following day.
Two other conspirators previously pleaded guilty and are awaiting sentencing.